Kennesaw, Georgia-based LendingPoint has secured $500 million in fresh lending capacity to fuel its consumer lending ambitions.
Founded by CEO Tom Burnside, CSO Juan Tavares, COO Franck Fatras, and CPO Victor J. Pacheco, LendingPoint is a balance sheet lender that lends up to $26,500 to consumers based on a proprietary underwriting algorithm designed to get a more complete picture of customers’ past history as well as their future ability to pay.
Juan E. Tavares, Chief Strategy Officer of Lending Point
The suite of services is aimed at ‘near prime’ consumers with FICO scores from 600 to 700. The firm then analyzes additional factors in the person’s history as well as his/her future ability to pay to determine creditworthiness and an appropriate product offer.
Of the company’s mission, Tavares said, “LendingPoint is in the business of democratizing access to credit for millions of people who are overlooked by risk models that rely too heavily on traditional credit scores.”
Interest rates range between 13.99% to 35%, with the average being 25.4%. LendingPoint’s consumer focus is highlighted in the video below.
The market for online lending to near-prime consumers has grown dramatically in recent years. A 2015 research report by Morgan Stanley illustrated its historical growth and its future growth forecast, as evidenced by the chart below.
LendingPoint’s approach is different from that of marketplace lenders since it is a ‘balance sheet’ lender, loaning out money from its own credit facilities rather than simply providing a ‘matchmaking’ service between third party lenders and borrowers.
LendingPoint has not only raised a total of $600 million in credit facilities to-date, but has also quietly raised $100 million in equity investment from its founders and associates. That equity investment has enabled the firm to build out its technology systems and organization needed to attract other financial institutions such as FinWise, a partnership it announced in March, 2017.
Management has indicated it intends to close another equity round within 30 days, so its investment in further expansion appears to be continuing. It’s an interesting approach, given a recent retrenchment away from consumer lending that has taken place among the more visible marketplace lenders.
With a generally improving economy, LendingPoint may have timed their entrance into the consumer market to take advantage of improved borrower profiles despite a slowly rising interest rate environment. That, coupled with its balance sheet-centric approach where it can retain greater control and potential profit from the loans it makes, may give LendingPoint a leg up in the large U.S. market for alternative sources of consumer financing.